Replies to post #339394 on InterDigital Inc (IDCC)

[slacker711]

Why would temporary market issues affect the buyout price?

The time frame for monetizing these patents or using them defensively is MUCH MUCH longer than any temporary market condition.

Risk premiums go up during periods of uncertainty. They go through the roof during market crashes. The risk premium is used to calculate how much companies are willing to pay for assets.

Beyond that, companies simply stop making acquisitions during any sort of crisis. It is beyond stupid since that is exactly the time that companies should deploy their cash....especially those companies who have balance sheets and business models which make it nearly impossible for them to ever have to worry about raising cash. It is one reason why I think that most tech companies carry way too much cash on their balance sheets. They refuse to use it when the opportunities are greatest.

Buffett is one of the few that goes against this rule.

IMO, a European meltdown would drastically reduce the odds of a sale....so getting a deal done before something breaks in the world economy does matter.

Slacker